5 September 1997
- role as trade hub would be strengthened by greater predictability of import duties and
liberalization of services Back to top
Benin is a trade centre and
thus committed to the principle of free trade. After discarding the Marxist-Leninist model
in 1990, Benin has progressively liberalized its economy in recent years, according to a
new report by the WTO Secretariat on Benin's trade policies and practices.
The Secretariat's report,
together with a report prepared by the Government of Benin, will serve as the basis for
the review of the country's trade policies to be held on 15 and 16 September 1997.
The Secretariat's report
notes that while Benin's trade legislation is liberal, it is not applied transparently.
Import duties, at an average of 13 per cent, are among the lowest in Africa, but
administrative procedures at the border are complex, slow and prone to irregularities.
Benin grants MFN treatment to imports from all sources. Nevertheless, the report
highlights that while import duties on agricultural goods have been bound, this is not
true for most industrial products.
New legislation has been
tabled to make access to Benin's market more reliable and attractive, in particular laws
on investment, government procurement and competition. The report also notes that outside
the legislative framework the informal sector accounts for much of economic activity in
Benin, which is therefore not reflected in the statistics.
Cotton, Benin's main export,
is exported to a number of countries (chiefly Brazil, Morocco and Portugal) and accounts
for more than 3 per cent of world exports. The cotton sector provides 20 per cent of
Benin's GDP and more than 90 per cent of its export earnings. The Government has a
monopoly for the purchase of all cotton production, and its goal is to double output by
the year 2000.
Agriculture as a whole
represents more than one third of Benin's GDP. In general, the agricultural product
processing sectors (oils, beverages, foods and textiles), exposed to competition from
imports, are recording profits. Benin's main imports are also agricultural products (rice,
cereals) which are to a large extent re-exported to neighbouring countries.
The report notes that
services continue to be protected by public monopolies, exclusive trading rights and
import prohibitions. Most service sectors (telecommunications, energy, non-life insurance
and air transport) are run by the State, which has a limited capacity for investment and
adaptation to new technologies.
Benin's main economic
partner is Nigeria. France is its principal supplier. Classed among the least advanced
countries, Benin receives non-reciprocal trade preferences from the developed countries
(Generalized System of Preferences and Lomé Convention). Benin is a member of the West
African Economic and Monetary Union (WAEMU), whose Treaty provides for the creation, as
from January 1998, of a customs union with a common external tariff. The Union
includes several countries whose tariff and non-tariff protection is considerably higher
than that of Benin. Benin is also a member of the Economic Community of West African
States (ECOWAS), which aims at the free movement of goods.
In conclusion, the report
suggests that Benin should bind all its import duties, which would confirm the openness of
its market and provide greater certainty for traders and investors, and that it should
further open its service sectors to private investment. Exhaustive application of the
Uruguay Round Agreements would favour these changes.
Note to Editors
The WTO Secretariat's
report, together with a report prepared by Benin will be discussed by the WTO Trade Policy
Review Body (TPRB) on 15 and 16 September 1997. The WTO's TPRB conducts a collective
evaluation of the full range of trade policies practices of each WTO Member at regular
periodic intervals and monitors significant trends and developments which may have an
impact on the global trading system. The two reports, together with a report of the TPRB's
discussion and of the Chairman's summing-up, will be published in due course as the
complete Trade Policy Review of Benin and will be available from the WTO Secretariat,
Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
The reports cover the
development of all aspects of Benin's trade policies, including domestic laws and
regulations, the institutional framework, trade policies by measure and by sector. Since
the WTO came into force, the "new areas" of services trade and trade-related
aspects of intellectual property rights are also covered. Attached are the summary
observations from the Secretariat and Government reports. Full reports will be available
for journalists from the WTO Secretariat on request.
Since December 1989, the
following reports have been completed: Argentina
(1992), Australia (1989 and 1994), Austria (1992), Bangladesh (1992), Bolivia (1993),
Brazil (1992 and 1996), Cameroon (1995), Canada (1990, 1992, 1994 and 1996), Chile (1991),
Colombia (1990 and 1996), Costa Rica (1995), Côte d'Ivoire (1995), Cyprus (1997), the
Czech Republic (1996), the Dominican Republic (1996), Egypt (1992), El Salvador (1996),
the European Communities (1991, 1993 and 1995), Fiji (1997), Finland (1992), Ghana (1992),
Hong Kong (1990 and 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia
(1991 and 1994), Israel (1994), Japan (1990, 1992 and 1995), Kenya (1993), Korea, Republic
of (1992 and 1996), Macau (1994), Malaysia (1993), Mauritius (1995), Mexico (1993),
Morocco (1989 and 1996), New Zealand (1990 and 1996), Nigeria (1991), Norway (1991 and
1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993), Poland
(1993), Romania (1992), Senegal (1994), Singapore (1992 and 1996), Slovak Republic (1995),
South Africa (1993), Sri Lanka (1995), Sweden (1990 and 1994), Switzerland (1991 and
1996), Thailand (1991 and 1995), Tunisia (1994), Turkey (1994), the United States (1989,
1992, 1994 and 1996), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996)
and Zimbabwe (1994).
Secretariats report: summary Back to top
TRADE POLICY REVIEW BODY: BENIN
Report by the Secretariat Summary Observations
1. In the course of the last
10 years, Benin has broken decisively away from the centralized planned-economy system
which had placed serious obstacles in the way of trade and has established a largely open
market economy. The transition has been gradual and the economy continues to be plagued by
problems in the health and education sectors which must be solved before economic growth
can take off. Although the trade legislation is liberal, the way in which it is being
administered seems to be arbitrary and lacking in transparency. Benin is particularly
exposed to changes in the trade polices of its neighbours, notably Nigeria, and its export
sector is dependent on a single basic product, cotton.
(1) Economic and trade
2. Despite a per capita
income of about US$370, which places it among the countries that are least advanced, Benin
is one of Africa's principal trade centres. After agriculture, which generates more than a
third of gross domestic product and the bulk of export earnings, port services and
commercial and transport services form the principal sector of activity. A considerable
proportion of the country's economic activities, including foreign trade, is conducted on
an informal basis, i.e. outside the national statistical system. To a considerable extent,
Benin's trade and related activities depend on developments associated with the various
import restrictions imposed by Nigeria, which remains its principal economic partner.
Other neighbouring countries, some of which are land-locked, use the Port of Cotonou as an
outlet to the sea.
3. Confronted at the end of
the 80s with a serious economic and financial crisis, characterized among other things by
a sharp fall in per capita income, in 1990 Benin abandoned the Marxist-Leninist model in
place since 1974. Since then, thanks to several macroeconomic stabilization programmes, it
has been able to re-establish the viability of its public finances and balance of
payments, although the latter continues to depend on external grants. The public
enterprises, including the three State banks which went bankrupt in 1988, have been
restructured, privatized or wound up. The State's arrears of payment, domestic and
foreign, are in the process of being absorbed. Together with the other members of the
franc zone, in January 1994, Benin devalued its national currency from CFAF 50 to its
present level of CFAF 100 to the French franc. The enterprises which benefited most from
this devaluation were those producing for export using inputs purchased locally. Economic
growth has stabilized at a level slightly above the rate of population increase, but
remains at the mercy of fluctuations in world cotton prices.
4. The available statistics
indicate that exports are geographically diversified, which reflects the strong demand for
Beninese cotton on world markets. Quality ginned cotton exports were evaluated at $230
million in 1996, or more than 3 per cent of world exports. The biggest customer is Brazil,
followed by Morocco and Portugal. Benin is aiming to double cotton exports between 1995
and 2000. France is by far Benin's main supplier, with 18 per cent of officially recorded
imports, but the sources of imports are also very diversified. When re-exports of imported
products, which represent about 40 per cent of estimated total exports, and the informal
trade are taken into account, Benin's principal trading partner is Nigeria, probably
followed by the Niger.
5. Apart from cotton, exports
include crude petroleum, fresh fruit, cashew nuts and palm oil. The imports are rice,
other cereals and new and used manufactured goods, all partly re-exported. To these must
be added the petroleum products imported by the Société nationale de commercialisation
des produits pétroliers (SONACOP) and by individual informal-sector importers.
6. Benin has taken hardly any
advantage of commitments to the GATT, now the WTO, to confirm the opening up of its
economy and trade. All its import duties on agricultural products were bound in the
context of the Uruguay Round at ceiling rates considerably higher than the tariffs
applied. At the same time, only the duties applicable to a few industrial products were
bound; for the rest, tariff bindings dating from 1964 remain in force and have never been
renegotiated despite important changes in the nature and level of the duties, as well as
in the nomenclature. A general binding would enable the authorities to confirm the opening
up of the import regime and would afford traders and investors greater certainty.
7. Benin has been an
independent and sovereign republic since 1 August 1960. The President of the Republic is
the head of State; as the holder of executive power, he determines and guides State
policy, appoints the members of the Government and assigns their functions. The Ministry
of Trade, Handicrafts and Tourism is responsible for formulating, implementing and
administering trade policy, in collaboration with the Ministry of Finance. A single
National Assembly, whose deputies are elected by direct universal suffrage for four years,
exercises legislative power. It votes the laws, including the finance bills which
determine the State's revenue and expenditure objectives.
8. The international treaties
and agreements, including the Agreement on the WTO, have the force of law as soon as
ratified, no implementing regulations being required. Under the Constitution, they take
precedence over domestic laws. Thus, in principle, the provisions of the WTO Agreement can
be invoked in Benin courts. Foreign trade and the activities of foreign companies were the
subject of several laws adopted in 1990 following the opening up of the economy to the
private sector. Since then, the principal tariff reduction and privatization and
government procurement measures have been adopted within the context of international
structural adjustment agreements.
9. Within the franc zone,
Benin forms part of the West African Economic and Monetary Union (WAEMU) which also
includes Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo
and whose issuing authority is the Central Bank of West African States (BCEAO) which is
responsible for the Union's monetary policy. The treaty establishing the WAEMU provides
for the creation, as from January 1998, of a customs union with a common external tariff
which will include several countries whose tariff and non-tariff protection is
considerably higher than that of Benin. The authorities are aware of the danger which
further barriers to trade would represent for the Beninese economy, the import and
re-export trade constituting a significant proportion of the country's economic activity.
10. Benin is also a founder
member of the Economic Community of West African States (ECOWAS), whose membership
consists of the members of the WAEMU plus Cape Verde, Gambia, Ghana, Guinea, Liberia,
Mauritania, Nigeria and Sierra Leone. The ECOWAS trade liberalization programme includes,
in principle, the abolition, as from 1994, of all non-tariff barriers to Community trade
and the free circulation of approved products within the Community, at the latest by 2000.
About 6 per cent of Benin's officially recorded imports come from ECOWAS. Benin benefits
from non-reciprocal trade preferences under the developed countries' General System of
Preferences and from preferential access to the European Union market under the Lomé
(3) Trade and investment
policy features and trends
(i) Recent evolution
11. The last ten years have
been characterized by the progressive liberalization of trade barriers with the
elimination of quantitative import restrictions in 1988, the abolition of import licences
in 1991 and the elimination of import price lists. The tariff reforms of 1991 and 1994
resulted in the number of taxes levied on imports being reduced to two and the range of
duty rates contracting from 16 to 5, while export taxes were almost entirely eliminated.
The Government introduced value-added tax in 1991 and lowered and simplified direct taxes,
while at the same time extending the tax base.
12. Since 1990, several new
laws have been submitted to the National Assembly to make trade and investment conditions
more reliable and attractive, in particular a draft government procurement code, a draft
law on competition, a draft customs code and a draft investment code, none of which has
yet been adopted. In practice, the existence of a large informal sector creates a
(ii) Type and incidence of
trade and investment policy instruments
13. Trade and investment
policy and practices have the dual aim of encouraging the development of local enterprises
without increasing the cost of goods and services in international trade, given the
importance of foreign trade as a source of income. The present level of trade protection
in Benin is therefore among the lowest in Africa. Tax instruments, in particular near
total exemption from direct and indirect taxes, are the chief means of providing
assistance for businesses.
14. Benin accords at least
MFN treatment to imports, whatever their origin. It has not yet adopted the Harmonized
Commodity Description and Coding System (HS). The customs tariff, based on the Customs
Cooperation Council Nomenclature (CCCN), provides for two MFN rates: fiscal duty, which
varies from 0 to 20 per cent, and the community solidarity levy of 1 per cent, which
is intended to compensate for the loss of customs revenue associated with the preferential
agreements. These import taxes, which are solely ad valorem, amount on average to
13 per cent, but the effective collection rate is much lower because of numerous
exemptions. Some products from the member countries of ECOWAS and WAEMU qualify for tariff
15. Value-added tax (VAT) was
introduced in 1991 at the rate of 18 per cent. Three quarters of Benin's VAT revenue is
collected on imports. This border taxation, favoured because it is relatively easy to tax
goods as they enter the country, is creating strains in the customs system by encouraging
operators to minimize the value of the goods declared. A system of preshipment inspection
of imports is in force but is not being applied to goods imported by the
"occasional" importers who account for a substantial proportion of the import
16. There are numerous
exemptions from customs duties and VAT which create serious administrative complications
that could distort trade and encourage irregularities. All Government contracts and most
investment are exempt from import duties and VAT. Most imports of inputs by local
enterprises are duty free. Considering the vital contribution to the revenue made by the
duties collected by customs and the importance of imports for the economy, Benin would
certainly benefit from more transparent customs and port regulations and closer control
and monitoring of imports to curb tax fraud. This would be much facilitated by the
elimination of the special import regimes.
17. Exports, of indigenous
products or goods in transit, are mainly free, except in the case of food crop products,
cotton and wood in the rough whose exportation is officially prohibited. Benin forbids the
exportation of products whose importation is prohibited in the country of destination,
which could encourage those who trade with those countries to avoid the customs posts.
(iii) Sectoral policies
18. Trade policy has not been
liberalized to the same degree in every sector of activity. Some sectors, in particular
the agri-food industry, have been broadly exposed to international competition, whereas
others remain protected by monopolies, exclusive trade rights and import prohibitions,
notably in the service sectors. The Government's objective of encouraging investment and
food product exports would necessitate a revision of the land tenure and trade legislation
in force in these sectors, in order to facilitate land purchase and exports, in particular
of food crop products.
19. In the cotton sector,
Benin is applying a highly interventionist policy intended to increase production in order
to generate tax revenue. Thus, the State has a monopoly on the purchase of the entire seed
cotton output, while providing the inputs and administering producer prices. The levies on
this sector represent one fifth of the State budget. The environmental authorities
recognize that present cotton production methods are not ecologically viable. The
assistance granted to the cotton producers has diverted resources from other crops; in
1994, against a background of local food shortages due to the difficulties of provisioning
the rural areas, the Government decided to prohibit exports of food crop products.
20. In general, the
agricultural product processing sectors (oils, beverages, food, textiles), which are to a
large extent exposed to international competition, are recording profits and have received
most of the modest investments made in recent years. The cement sector, protected from
imports by a ban, was liberalized in May 1997. Most of the service sectors, in particular
telecommunications, energy, non-life insurance and air transport, are organized as public
monopolies and handicapped by the State's limited capacity for investment. The resulting
delay in adapting to new technologies and market trends is taking its toll in terms of
costs and efficiency on the economy as a whole, which illustrates the need to apply to
these sectors the deregulation in progress elsewhere in the economy.
(4) Trade policies and
foreign trading partners
21. Benin's commitment to the
principle of free trade is ensured by its role as a commercial hub. Despite belonging to a
regional economic area, the country trades with the whole world, largely on a MFN basis.
In order to manage the changes in the trade policies of its principal regional partners to
best effect, it is in Benin's best interest to bind its policies to the principles of the
multilateral trading system. The implementation of the Uruguay Round Agreements will make
possible a general review of the goals of its trade, fiscal and sectoral policies and
favour economic liberalization in those sectors in which it has not yet taken place.
22. The rapid and exhaustive
application of the provisions of the Agreement on the WTO would provide the economic
operators, domestic and foreign, with a stable and transparent framework within which to
do business. Further simplification of the trade regime would also make a significant
contribution to the development of such a framework, as would harmonization of the
legislation with business measures and practices. These efforts would be encouraged by
greater support from Benin's more developed economic partners. The Government could signal
its commitment to reform by opening up the numerous sectors of activity so far
inaccessible to foreign investment, such as telecommunications, air transport, energy and,
to a large extent, agriculture, which would offer real possibilities in terms of
employment, technological progress and economic growth.
report Back to top
TRADE POLICY REVIEW BODY: BENIN
Report by the Government
The Republic of Benin covers
an area of about 112,600 km2 which is divided, for administrative purposes, into six
provinces (départements), each governed by a prefect (Atacora, Atlantique, Borgou,
Mono, Ouémé and Zou). In 1996, the population of Benin was about 5.4 million, increasing
at an annual rate of 3.1 per cent.
Annual per capita income is
about US$370, placing Benin among the world's least developed countries.
In reviewing Benin's
economic situation, it is important to stress that the transition, in 1990, from a
single-party regime to a pluralist democracy marked the end of two decades of planned
The economic situation in
Benin began to decline in 1987, and from 1986 to 1989 Benin experienced, in real terms, a
negative GDP growth rate. In 1990, Benin opted for a pluralist democratic regime and a
policy of economic liberalization.
Development policies have
focused primarily on macroeconomic stabilization through three structural adjustment
programmes under the auspices of the International Monetary Fund (IMF) and the World Bank.
Thanks to the adjustment
policies, the economy has achieved remarkable performances.
Benin's principal reforms
have been introduced in the framework of its Second Structural Adjustment Programme
launched in 1991 with the assistance of the IMF and the World Bank. Thanks to this
programme, the overall situation in Benin has considerably improved and substantial
progress has been achieved.
Indeed, the GDP has grown by
an average of 4 per cent in real terms thanks to the cultivation of cotton. Public
finances have been stabilized, and the primary balance reached 2.2 per cent of GDP as of
1992 owing to a sustained effort to increase revenue, control spending, steadily reduce
the budget deficit and raise the rate of government investment. Domestic arrears were
practically cleared, and the banking system was rebuilt.
The policy of reorganizing
Benin's public finances was given an added impetus in 1994 with the modification of the
CFA franc's external parity aimed at stimulating the export and the import substitution
sectors as well as investment and capital inflow.
In 1996, in the framework of
the Third Structural Adjustment Programme, the new Government adopted a macroeconomic
strategy consisting of:
sustained growth of the national economy;
the country's social infrastructure; and
the country's public finances in order to reduce the debt burden and its dependence on the
In order to attain these
objectives, the Government set itself the task of promoting investment and domestic saving
while redirecting its resources towards the priority sectors.
A. TRADE POLICY AND
(1) General trade policy
The new Government formed in
the wake of the presidential elections of March 1996 plans to take effective steps to
consolidate the foundations of Benin's economic and social development.
On 15 May 1997, the
President of the Republic and Head of Government published the Government's plan of
action, reflecting a policy aimed at creating a competitive and productive economy resting
on the private sector.
The Government's general
objectives in this respect are:
support the private sector through the development of trade;
contain the increase in the price of mass consumption goods;
promote the development of tourism and handicrafts; and
promote the private sector by:
existing enterprises and facilitating the creation and development of new enterprises;
the formalities involved in setting up enterprises;
an industrial free zone in Cotonou; and
an opportunity centre.
(2) Sectoral trade policy
agricultural policy focuses on:
of local agricultural produce;
of food safety;
of agricultural production; and
of agricultural exports.
To that end, the Government
plans to modernize and develop agriculture through measures aimed at:
production methods to increase output and reduce pressure on domestic prices;
local industries, inter alia by organizing "open days" for existing
industries and creating the necessary structures for consultation among the actors in the
different subsectors: textiles, fruit and vegetables, cashew nuts, oilseeds, cassava and
the permanent availability of sufficient water resources for pasture farming and
fisheries. To that end, a number of micro-dams and impoundments are planned;
systems for the financing of agriculture through the creation of an agricultural bank
backed by private partners;
the performance of the different agricultural subsectors through public and private
nursery production and subsidization of the purchase of selected seedlings; and
and extension of the rural access road network through road works and maintenance.
Benin's policy in the field
of energy reflects a determination to achieve energy self-sufficiency and to electrify the
entire country at the lowest possible cost.
To that end, the Government
all of the provincial capitals with electricity by building thermal power stations,
linking them to the grid interconnecting certain provincial capitals and urban centres and
electrifying certain towns through solar energy;
and extend the electricity grid in the cities; and
electricity generation capacity by building the Adjarala dam, interconnecting the NEPA
(Nigeria) grid with the CEB (Benin-Togo) grid and constructing a gas-driven thermal power
The Government's objectives
in this area focus on supporting private initiative through measures such as:
of certain production units through the privatization of the Société sucrière de
Savé, the Brasserie d'Abomey, the Société des ciments d'Onigbolo, and
the Société nationale d'industrie des corps gras (SONICOG);
of the formalities involved in setting up enterprises;
of serviced industrial zones in all of the provinces; and
of an industrial free zone in Cotonou.
The reorganization of
Beninese financial services is one of the prerequisites to development of the private
This is why the
modernization of the banking sector is one of the Government's priorities. Hence, the
restructuring of the Beninese banking sector at the beginning of 1990s. Since then, five
trade banks have been authorized to set up. These banks account for 90 per cent of savings
in the formal sector, and are able to meet development financing needs.
In the transport and
communications sectors, the Government's objective is to ensure the maintenance and
rehabilitation of infrastructure and access to a transport and communications network.
To that end, the Government
is taking measures to:
the road network by restoring the earth and paved roads and asphalting the trunk roads,
and by building a third bridge in the city of Cotonou;
the competitiveness of the autonomous port of Cotonou by building a container terminal;
the airport facilities through the restoration of the freight and passenger terminals of
Cotonou and the secondary airfields;
the railway network by restoring railway lines, modernizing the equipment of the Organisation
commune Bénin-Niger des chemins de fer (OCBN) and putting the coastal railway lines
In the telecommunications
sector, the objective is to boost the efficiency of the national telephone network and
reduce telecommunication service costs for Beninese enterprises.
Promotion of the tourist
sector is one of the Government's priorities. Indeed, Benin has a number of untapped
Accordingly, the Government
plans to take measures aimed at:
tourist sites and access roads in all of the provinces in order to facilitate access and
increase the number of visitors in the best possible conditions;
a policy of private-sector construction and development of tourist and hotel
In the field of
handicrafts, government promotion activities are directed towards:
creation of chamber of trade;
preparation and introduction of a code of handicrafts;
implementation of a policy of encouraging the construction of craft villages by the
organization of sales exhibitions of Beninese handicrafts abroad.
(3) General description of
the import and export regime
In the framework of the
trade liberalization policy, legal or regulatory provisions that were considered
restrictive were for the most part eliminated or amended.
Import licences were
eliminated in the framework of the Structural Adjustment Programme (Law No. 90-005 of 15
May 1990 and Law No. 93-007 of 29 March 1993) in an effort to promote economic
However, the import of
certain products is prohibited for health reasons, for example, rumps of turkey
(Interministerial Order No. 347/MCAT/MDRAC/MSP/CAB/DCE/DCI of 24 December 1990).
The importation of goods
that are dangerous to human health and State security is subject to a special
Beninese products merely
require an authorization from the Directorate of Foreign Trade. Only food crops are
subject to a temporary prohibition.
This temporary suspension
was made necessary by a shortage on the domestic market following a breakdown in food
In order to maintain the
country's natural resources (flora), exportation of teak in the rough is prohibited, and
only processed wood may be exported.
(4) Trade policy framework
(a) Laws and regulations
governing the implementation of trade policy
The Constitution is the
supreme law of the Republic of Benin. Legislative power is in the hands of a single
The National Assembly votes
the laws, including financial laws setting of the Government's income and expenditure
The President of the
Republic has the power to negotiate and conclude international agreements, and may
delegate that power to a minister or a member of the Executive. Where it is necessary to
amend laws to make them consistent with the provisions of an agreement, the Parliament
must vote a law authorizing that amendment.
Trade policy is applied by
several government institutions and executive bodies.
The Ministry of Trade,
Handicrafts and Tourism may, if need be, submit draft laws.
The laws relating to trade
cover several areas:
(b) Formulation and review
of trade policies
The Ministry of Trade,
Handicrafts and Tourism is responsible for devising, implementing and administrating trade
policy. Once drawn up by the Ministry, laws are submitted for examination and approval by
The Ministry of Trade,
Handicrafts and Tourism draws up trade policy measures in consultation with the private
sector (Chamber of Trade and Industry of Benin) and the other competent institutions
(Ministry of Finance, Directorate-General of Duties and Indirect Taxes), the Ministry of
Planning, Economic Restructuring and Employment Promotion, the Ministry of Industry and
Small and Medium-Sized Enterprises, etc.
bilateral and regional trade agreements
Government policy in respect
of multilateral, regional and bilateral trade agreements is directed towards the creation
of a favourable environment for the integration of Benin into the international economy
with a view to ensuring outlets for its products and fostering the development of its
The following are some of
the agreements concluded by Benin:
Establishing the World Trade Organization (WTO);
Lomé Convention Between the ACP and the EU;
Benin is a signatory to the
Fourth Lomé Convention between the European Union and 71 ACP States. Under this
Convention, its exports of industrial and agricultural products not covered under the
Common Agricultural Policy (PAC) enjoy duty-free entry (non-reciprocal) to the Community
Having become a founding
Member of GATT in 1963 Benin, upon authorization by the National Assembly (Decree No.
95-241 of 5 September 1995), ratified the Agreement Establishing the WTO, thus becoming a
Member of that Organization on 22 February 1996.
Benin is convinced that the
Agreement Establishing the WTO will serve the interests of the developing countries in
general and the LDCs in particular. However, these countries will need greater assistance
in order to fully profit from the various WTO Agreements.
Benin is a member of the
Economic Community of West African States (ECOWAS) and has espoused the idea of creating a
regional common market, a single currency and a customs union within the West African
Economic and Monetary Union (WAEMU).
(5) Implementation of
(a) The trade policy
measures applied in Benin are:
Since 1989, Benin has been
firmly committed to the path of economic liberalization which led, in 1991, to a major
tariff reform. This reform involved the streamlining of the numerous existing levies into
duty: 5 per cent (suspended);
solidarity levy (PCS): 1 per cent;
import duty: 0 per cent, 5 per cent, 10 per cent, 15 per cent and 20 per cent;
tax (VAT): 18 per cent.
As indicated above, there
are five rates of fiscal duty according to the tariff class.
The documents required for
customs transactions are the importer's card; the purchase invoice; the invoice showing
the insurance premium; the certificate of origin; the customs valuation certificate; and,
where applicable, the phytosanitary certificate.
valuation and preshipment inspection
Customs valuation is
currently based on the transaction value of the goods. The principles governing customs
valuation in Benin are based on Articles 24, 25, 27 and 28 of the Customs Code.
A compulsory preshipment
inspection system has been in force since 1991. All imports of goods must comply with the
formalities of the inspection company which consist of:
an import application for all invoices exceeding CFAF 3 million (by sea);
the goods controlled prior to shipping;
the final invoice after inspection;
a customs valuation certificate which must be submitted to the customs authorities during
In cases of undervaluation,
the inspection company rejects the values appearing on the invoice and makes the necessary
adjustments on the basis of the information available in the importing country or taking
account of the value of like products, mentioning such adjustments on the customs
(b) Current trade
liberalization programme in the framework of the Structural Adjustment Programme
From 1975 to 1989, Benin's
economy was heavily regulated under an economic strategy which relied on the public sector
for investment and growth. The results did not live up to expectations. In 1989, Benin
launched an economic liberalization programme with the support of the International
Monetary Fund and the World Bank.
In doing so, the
Government's objective was to create an environment favourable to the development of
private initiative. To that end, the following measures were taken:
of import licensing and import and export restrictions;
of Benin's laws and regulations to the new, highly liberal economic environment.
B. ECONOMIC REFORM
Trade policy is but one
element of a broader policy covering investment, tourism, transport, financial services,
All of these elements are
linked, in their turn, to the main features of an economic policy which aims to guarantee
prosperity for all of the Beninese people and sustained economic growth.
During the 1980s, Benin
underwent a serious economic crisis, and starting in 1989, with the help of the
International Monetary Fund and the World Bank, it had to introduce a structural
adjustment programme aimed at stabilizing the economy, reversing the decline in the
standard of living, achieving sustainable growth and improving the external payments
On the macroeconomic side,
the Government adopted a strategy for the period from 1996 to 1999, consisting of:
sustained growth of the national economy;
the country's social infrastructure; and
the country's public finances in order to reduce the debt burden and its dependence on the
In connection with this
strategy, it has set itself the following goals:
ensure average GDP growth rate of 6 per cent;
maintain inflation at a level of about 3 to 4 per cent per year;
reduce the current external deficit (excluding grants) to 5.5 per cent by 1999.
This external debt reduction
is to be achieved by diversifying exports and ensuring the satisfactory performance of the
In order to attain these
goals, the Government has set itself the task of promoting domestic investment and saving
while redirecting resources towards the priority sectors.
In this respect, it aims to
raise the average rate of government investment to about 7.8 per cent.
To finance the increased
investment without negatively affecting the balance of payments, the domestic savings rate
will have to increase from 9 per cent of GDP in 1995 to approximately 13 per cent in 1999.
Thus, budgetary policy will
be directed towards a gradual increase in public savings, in spite of the decrease in
This policy should make it
possible to improve the current account balance, which should go from 8.6 per cent of GDP
in 1995 to 5.5 per cent of GDP in 1999.
The volume of exports, not
including re-exports, should increase by 9.6 per cent from 1997 to 1999, while re-exports
should continue to grow and imports not intended for re-export should increase by
approximately 6.5 per cent in real terms during the same period.
With respect more
specifically to the development of the private sector and the diversification of economic
activity, the Government has opted for:
of non-traditional exports and the reduction in transports costs;
of a single window for investors and the promotion of an industrial free zone;
of the fiscal and legal climate and the strengthening of the judicial system.
CONCLUSION Back to top
As can be seen from this
trade policy review, Benin is relentlessly pursuing its economic liberalization programme.
In accordance with that programme, and with a view to creating an institutional
environment more favourable to the development of business, a certain number of reforms
are currently under way, including the revision of the Labour Code, the Mining Code, the
Commercial Code, the Civil Procedures Code and the Administrative Code.
The introduction of a centre
for business formalities (single window) aimed at bringing the public sector closer to the
private sector is practically a reality.
The simplification of
administrative procedures, the improvement of the Institutional Code and the adaptation of
Beninese laws and regulations to the new, highly liberal economic environment all focus on
the same target: the creation of an environment in which a liberal economy can flourish.
The proper management of a
liberal economy calls for the strengthening of democracy, improved governance and further